Ch. 14 LearnSmart
True or false: Similar to businesses, NFPs are required to classify their investments into trading, available-for-sale, and held-to-maturity categories.
False
True or false: If an NFP receives the use of a building at a reduced rate, the difference between the rent paid and the fair market value should be reported as a contribution that is unrestricted.
True
Collections are works of art, historical treasures, and other assets that are: (Check all that apply) a. held for public exhibition b. protected, kept unencumbered, cared for, and preserved c. subject to a policy that requires that proceeds of items sold be used for educational purposes
a & b
Which of the following would be considered contributed services to be recognized at fair market value? (Check all that apply) a. Local nurse provides free nursing services at a senior center b. Local CPA prepares tax returns for a museum c. Retired schoolteacher reads books to preschoolers at the local library d. Advertising time is donated by the local TV network
a & b
In order to allocate joint costs of activities that combine a program or administrative activity with fund-raising: (Check all that apply) a. they must meet the criteria of purpose, audience, and content b. the total costs should be reported as fund-raising costs if a bona fide program or management and general function has been conducted. c. they must be allocated between the bona fide program or management and general function and fund-raising using an equitable allocation method
a & c
Which of the following statements are correct? (Check all that apply) a. Hospitals and social service organizations may be governmental or nongovernmental b. Organizations that have the ability to issue debt with tax-exempt interest are always considered governmental organizations c. If an organization has the power to enact and enforce a tax levy, it is a governmental organization
a & c
Which of the following statements regarding the statement of cash flows are correct? (Check all that apply) a. Temporarily and permanently restricted net assets are included in the financing activities section b. Unrestricted gifts are included in the investing activities section c. Acquisition of a building using restricted net assets is reported as an investing activity d. Donor-imposed restrictions are reported separately
a & c
Which of the following are types of gifts a donor may give? (Check all that apply) a. Without restriction b. Purpose restriction c. Time restriction d. Board restriction
a, b, & c
Examples of revenues arising from exchange transactions include: (Check all that apply) a. sales of goods and services b. program fees c. government grants d. gain on sale of equipment e. membership dues
a, b, & e
Select the true statement regarding donated materials. a. FASB ASC 958-605-30-11 requires that all unconditional gifts, including material amounts of donated materials, be reported at fair value b. FASB ASC 958-605-30-11 requires that all unconditional gifts, including material amounts of donated materials, be reported at the donor's cost c. FASB ASC 958-605-30-11 requires that all unconditional gifts, except for material amounts of donated materials, be reported at fair value
a. FASB ASC 958-605-30-11 requires that all unconditional gifts, including material amounts of donated materials, be reported at fair value
Governmental not-for-profit organizations are the responsibility of the: a. GASB b. AICPA c. FASB
a. GASB
Identify the true statement regarding special events. a. Revenues from special events are reported gross with the direct expenses of providing the benefit reported separately b. If the special event is a major part of the NFP, the direct expenses can be netted against revenues c. Expenses of promoting special events should be charged against special events revenue
a. Revenues from special events are reported gross with the direct expenses of providing the benefit reported separately
An unconditional promise to give is recorded as support in the year: a. made b. received c. used
a. made
When the donor states that assets are to be held in perpetuity but allows the organization to spend any income earned from investing those assets, they are _____ net assets. a. permanently restricted b. unrestricted c. board-designated d. temporarily restricted
a. permanently restricted
For a program to qualify as bona fide, it must meet the following criteria a. purpose, audience, and content b. purpose, fund-raising appeal, or content c. purpose, fund-raising appeal, and content d. purpose, audience, or content
a. purpose, audience, and content
A statement of functional expenses is: a. required for voluntary health and welfare organizations b. required for nongovernmental not-for-profit organizations c. required for voluntary health and welfare organizations (VHWOs) and other nonprofit organizations (ONPOs) d. required for all not-for-profit organizations
a. required for voluntary health and welfare organizations
When an NFP obtains control of one or more NFP activities or businesses, a(n) _____ occurs.
acquisition
Fund categories described in the AICPA Audit and Accounting Guide, Not-for-Profit Organizations include: (Check all that apply) a. special revenue funds b. annuity and life income funds c. plant funds d. endowment funds e. enterprise funds
b, c, & d
FASB ASC 958-205-45-4 requires, as a minimum, that all NFPs present a: (Check all that apply) a. comparative financial statements b. statement of cash flows c. statement of financial position d. statement of functional expenses e. statement of activities
b, c, & e
Stakeholders of NFPs that use not-for-profit financial statements include: (Check all that apply) a. Internal Revenue Service b. donors c. members d. lenders e. grantors
b, c, d, & e
Starting after December 15, 2017, a statement of functional expenses is required by the FASB for: a. nongovernmental not-for-profit organizations b. all not-for-profit organizations c. voluntary health and welfare organizations d. health care entities
b. all not-for-profit organizations
An NFP should consolidate another NFP in which it has: a. a controlling financial interest but not an economic interest b. both a controlling financial interest and an economic interest c. a economic interest but not a controlling financial interest
b. both a controlling financial interest and an economic interest
If an NFP organization has a controlling financial interest through directly or indirectly owning a voting majority in a for-profit entity, the NFP organization should: a. use the equity method to report investments in the entity b. consolidate the for-profit entity's financial information with its own c. use the method according to variable interest entity standards
b. consolidate the for-profit entity's financial information with its own
Cash collected totaled $37,500 for unrestricted pledges and $8,700 for restricted pledges for a voluntary health and welfare organization. The entry to record the cash collections would include a: a. credit to Contributions Receivable - Unrestricted for $46,200 b. credit to Contributions Receivable - Temporarily Restricted for $8,700 c. credit to Contributions Receivable - Temporarily Restricted for $46,200 d. credit to Contributions Receivable - Unrestricted for $8,700
b. credit to Contributions Receivable - Temporarily Restricted for $8,700
The statement of activities: a. reports operating, investing, and financing activities broken down into proceeds from contributions restricted and other financing activities b. presents changes in net assets without donor restrictions, net assets with donor restrictions, and total net assets for the reporting period c. presents assets restricted as to use
b. presents changes in net assets without donor restrictions, net assets with donor restrictions, and total net assets for the reporting period
Assets that are restricted as to their use should be: a. included with current assets on the statement of financial position b. reported separately from current assets on the statement of financial position
b. reported separately from current assets on the statement of financial position
The following pledges were recorded for the current year fund drive for a voluntary health and welfare organization. Pledges of $39,000 were unrestricted and $10,200 were donor restricted for a special project to be undertaken in the current year. The entry to record these pledges would include a: a. Credit to Contributions - Unrestricted for $49,200 b. Debit to Contributions Receivable - Unrestricted for $49,200 c. Credit to Contributions - Unrestricted for $39,000 d. Credit to Contributions - Temporarily Restricted for $39,000
c. Credit to Contributions - Unrestricted for $39,000
Identify the correct statement regarding the notes to financial statements for NFPs. a. The nature and amounts of unrestricted, temporarily restricted, and permanently restricted net assets must always be disclosed. b. A note reporting the detail of reclassifications, investments, and promises to give is required. c. Disclosures include principles applicable to for-profit entities unless there is a specific exemption for not-for-profit organizations.
c. Disclosures include principles applicable to for-profit entities unless there is a specific exemption for not-for-profit organizations.
A VHWO sponsored an event for a special outreach project that yielded cash contributions of $8,000. Direct expenses of $2,500, not considered peripheral or incidental in nature, were incurred. The journal entry to record this event would include a: a. a credit to Contributions - Temporarily Restricted - Program for $5,500 b. a credit to Contributions - Temporarily Restricted - Program for $8,000 c. a credit to Special Event Revenue for $8,000 d. a credit to Direct Costs - Special Outreach Project - Program for $2,500
c. a credit to Special Event Revenue for $8,000
Contributions for which either no donor restrictions exist or the restrictions have expired, revenues for services provided, and investment income given rise to: a. board-designated net assets b. temporarily restricted net assets c. net assets without donor restrictions
c. net assets without donor restrictions
Net assets are classified as: a. net assets without donor restrictions board-designated net assets, and permanently restricted net assets b. capital investments, net assets without donor restrictions and net assets with donor restrictions c. net assets without donor restrictions and net assets with donor restrictions d. unrestricted net assets, donor restricted net assets, and permanently restricted net assets
c. net assets without donor restrictions and net assets with donor restrictions
When an agent or intermediary receives an asset in a transfer between a donor and a beneficiary, they should: a. recognize an asset and contribution revenue when it receives a donation on behalf of the beneficiary organization b. recognize contribution revenue when it receives a donation on behalf of the beneficiary organization c. recognize an asset and a related liability when it receives a donation on behalf of the beneficiary organization
c. recognize an asset and a related liability when it receives a donation on behalf of the beneficiary organization
An intermediary received $4,000 in cash from a donor. The donor indicated that she wanted her donation to go to the local not-for-profit hospital. There is no financial relationship between the intermediary and the hospital. The journal entry made by the intermediary a. would be the same as if they were financial interrelated b. would include a credit to Contributions - Unrestricted for $4,000 c. would include a credit to Contributions payable for $4,000
c. would include a credit to Contributions payable for $4,000
An example of a(n) _____ _____ to give is a pledge to make matching gifts.
conditional promise
A voluntary, unconditional and nonreciprocal transfer of cash or other asset to a NFP by an entity external to the NFP is called a(n) _____.
contribution
Select the true statement regarding gifts from donors. a. FASB requires that both unrestricted and restricted gifts be recognized as support at the donor's cost b. FASB requires that only unrestricted gifts be recognized as support at fair value at the time the gift is given c. FASB requires that only restricted gifts be recognized as support at fair value at the time the gift is given d. FASB requires that both unrestricted and restricted gifts be recognized as support at fair value at the time the gift is given
d. FASB requires that both unrestricted and restricted gifts be recognized as support at fair value at the time the gift is given
The Single Audit Act and OMB Circular A-133 apply to: a. governmental and nongovernmental NFPs expending $500,000 or more in federal awards b. all not-for-profit entities expending $1,000,000 or more in federal awards c. governmental but not nongovernmental NFPs expending $750,000 or more in federal awards d. governmental and nongovernmental NFPs expending $750,000 or more in federal awards
d. governmental and nongovernmental NFPs expending $750,000 or more in federal awards
Expenses that relate to either the program or mission of the organization or the management and general and fund-raising expenses required to support the programs are called _____ expenses.
functional
Public universities often create NFPs referred to as _____ _____ foundations for fund-raising, managing businesslike activities or endowment assets, or conducting medical or other research.
institutionally related
The cost of publicity and public relation activities designed to keep the organization's name before prospective contributions are included as part of _____ and _____ expenses.
management; general
When two or more NFPs combine to create a new NFP, a(n) _____ occurs.
merger
FASB ASC 958-805 provides that NFPs can recognize a combination of two or more NFP organizations as either a(n) _____ or a(n) _____.
merger; acquisition
NFPs have long been required to support expenses by functions classifications such as major _____ and _____ classifications.
program; support
If a NFP organization has a(n) _____ endowment, it must disclose policy and actions concerning appropriations from the endowment, the fair value of the endowment and the extent by which the endowment has fallen below its original value.
underwater
When the agent or intermediary has the ability to redirect the assets it receives to an entity other than the beneficiary organization, _____ _____ exists.
variance power